MTS Report Compiled 1.1

KSRM 1
Feasibility Of Distributing Agri-Inputs Through VLSC

KSRM 2
Feasibility Study of Distribution of Agricultural Inputs through the Village

Level Service Centers of the Supply Chain of UJAS
Authors
Arti Mishra
Rukshana Praveen
Reza Mohammad Khan
Sumeet Kumar Pandey
Host Organization
Udyogini, Jabalpur, M.P.
Faculty Guide
Prof. Alok De
“A REPORT SUBMITTED IN THE PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR MASTERS IN RURAL
MANAGEMENT.”
School of Rural Management

Kalinga Institute of Industrial Technology (KIIT) University
Bhubaneswar, Orissa, India.
September 2009
Management Traineeship Segment (MTS) I
KSRM 3
Approval Page
SCHOOL OF RURAL MANAGEMENT, KIIT UNIVERSITY
Bhubaneswar
The MTS Report of
Arti Mishra
Rukshana Praveen
Reza Mohammad Khan
Sumeet Kumar Pandey
Candidate for the degree of MBA Rural Management
Is hereby APPROVED
Prof. Alok De
KSRM 4
Executive Summary
KSRM 5
Acknowledgment
In preparing this report a considerable amount of thinking and informational inputs from
various sources were involved. We express our sincere gratitude to everyone who contributed
towards making this report possible.
First of all we would like to thank dignitaries of Udyogini, CEO, Mrs. Vaneeta Vishwanath,
COO, Mr. Arvind Malik, our Business Development Manager, and Mr. Sandeep Mishra for
giving us the guidelines for successful completion of this report. We would like to thank our
reporting officer Ms Ketaki Narkar for her valuable support and feedback.
We would also like to thank all our respondents for their response without which this study could
not be possible.
We also take a special mention of faculty of KSRM, Prof Alok De for his valuable inputs.
Thank You
KSRM 6
Table of contents
Chapters, sections, sub sections with page numbers

KSRM 7
Lists
List of Tables/ Figures/ Abbreviations

Each table / figure / appendix should be labeled with a title in ‘Sentence Case’ and a number.
Data source should be mentioned
Page numbers of tables/ figures/ appendices should be mentioned
KSRM 8
. Glossary
List of new terms with explanation

KSRM 9
1. Introduction
The agriculture has potential to create economic growth in rural areas. It generates jobs
opportunities in adding value (as in food processing industry), in bringing agriculture products to
the customers (market linkage), and in providing support (infrastructure, information, quality
control and training). Agriculture is still the mainstay of the State's economy, as about 71 percent
of the population is still dependent on agriculture. Agriculture in the state is still traditional and
mostly rain fed. There is high proportion of low value crops with low productivity. Agricultural
holdings are fragmented. Madhya Pradesh has unique topography, soil and weather, which is one
of the major reasons that the impact of green revolution had been negligible on the agriculture
sector of the state
About 74% population of M.P. resides in rural areas. Around 65 percentage of the total land
holdings belong to small and marginal farmers occupying only 26 percent of the cultivable land.
The net sown area is about 147.90 lakh hectares. The gross cropped area is 202.16 lakh hectares.
The ratio of Kharif to Rabi crops is 1: 0.79 during 2006-07. The total irrigated area of the State is
43.3 % and remaining area is rain fed. The cropping intensity of the State is 136%.
The State is divided in the following 11 Agro Climatic Zones: (1) Chhatisgarh plains (Balaghat
district falls in this zone) (2) Northern hill region of Chhatisgarh (Districts of Shahdol,
Mandla, Dindori, Anuppur, Umaria and part of Sidhi fall in zone) (3) Kymore plateau and
Satpura hills (4) Central Narmada Valley (5) Vindhya Plateau (6) Gird region (7) Bundel Khand
(8) Satpura Plateau (9) Malwa Plateau (10) Nimar Plains (11) Jhabua hills. Agro ecologically
the state falls in three zones namely, Zone –VII (Eastern Plateau and hills Zone), Zone VIII
(Central plateau and hills Zone) and Zone IX (Western Plateau and hills Zone)
The major Kharif crops are: Paddy, Jowar, Maize, Bajra, Tur, Urad, Moong, Soybean,
Groundnut and Cotton etc. The major Rabi crops are: Wheat, Gram, Lentil, Peas, Mustard and
Linseed etc.
KSRM 10
As part of the Management Traineeship Segment, the major persona was feasibility study of
distribution of agriculture inputs and farm equipments on lease through VLSC. A study of
business analysis in both financial and operational aspect of different opportunities was carried
out to understand the various perspectives for the initiatives undertaken by Udyogini. In order to
identify challenges for the organization in current and future context different concepts that were
learnt in the classroom were utilized. The period of the study was from the 6th of July to the 6th
of September 2010.
1.1.1 Global Agri-Input Scenario:
World fertilizer consumption increased from 1995/96 to 1999/2000, declined in 2000/01 by

about 3 percent and then increased by 1 percent. Fertilizer consumption remained stable in
Developing countries and but increased in developed countries by 4 percent. World nutrient
consumption in 2001/02 showed an overall rise for all three nutrients (nitrogen, phosphate and
potash). Compared with 2000/01, nitrogen consumption increased by 1.3 percent, while
phosphate and potash consumption fell by 1.7 and 4.3 percent respectively. World fertilizer
consumption started to increase again in 2001/02. The trend in the developed countries showed
an annual decrease of 3.3 percent for the period 1990–2000. In the economies in transition, the
annual rate of decline was 12 percent for the same period. Total world nutrient production
increased by 2.7 percent in 2001/02 in response to increased demand. In the developing
countries, production increased 1.7 percent (about 0.8 million tonnes) for all three nutrients.
Africa increased its production by 4 percent and production in Asia rose by 1.8 percent. In
developed countries it increased by 0.3 percent. Australia increased its production by 13.6
percent, Belarus by 7.3 percent, the Russian federation by 5.8 percent and the Unites States by
6.2 percent. China is the largest producer and accounted for 20.4 percent of the world’s
production in 2001/02.
Total world nutrient trade in 2001/02 rose by 4 million tonnes (6.6 percent). International
fertilizer trade occurs almost equally in developed and developing countries. Exports of nitrogen
KSRM 11
and potash decreased by 1.5 and 1.9 percent respectively, while those of phosphate increased by
2.1 percent
1.1.2 Agri Input Scenario In India:
India, Pakistan and Bangladesh remain the main fertilizer consuming countries in South Asia.
The sub-region is facing considerable population pressures, with very limited reserves of good
agricultural land. Fertilizer consumption rose by 3 percent to 2.2 million tonnes. Tentative
forecasts show an average growth of 2.4 percent. The growth should be faster on phosphate (3.1
percent) than on nitrogen (2.1 percent) and potash (2.7 percent).In India, the largest fertilizer
consumer and producer in the sub region, nitrogen, phosphate and potash consumption increased
by 3.6, 4 and 6.4 percent respectively. Imports of nitrogen, phosphate and potash also rose by
12.3, 16.9 and 6.5 percent respectively. Higher increase in the consumption of phosphate and
potash relative to nitrogen is a welcome trend towards balanced use of nutrients. India’s
production of nitrogen fertilizers decreased by 2.3 percent while its production of phosphate
fertilizers rose by 2.7 percent. India’s New Pricing Policy for urea intends to gradually move in
the direction of parity with international prices and will be implemented in stages. The new
scheme is expected to promote production efficiency through cost saving measures and efficient
economic practices at par with international norms by the domestic urea producers. Subsidy on
decontrolled phosphoric and potash fertilizers is given under the Concession Scheme, which
varies per State. The government has linked their pricing to import parity from April 2002
onwards. Hence, natural gas prices register significant increase. The growth in urea demand has
been stagnating. The reasons for this change are the development of large grain surpluses, in
spite of a growing population, and the need for crop diversification using compounds rather than
urea.
KSRM 12
1.2.1 Organization Overview:
Udyogini - means woman entrepreneur. Udyogini, the organization, works with poor women to
improve their skills as producers and their knowledge of the markets they operate in, so as to
ensure long-term returns
Udyogini, an NGO set up in 1992, has been working for the capacity building of poor women
through micro-enterprise development and its management. Udyogini was set up to co-ordinate
and facilitate management training for women’s groups at the grassroots under the World Bank
Institute funded Women’s Enterprise Management Training Outreach Program (WEMTOP).
This was a three-year participatory action learning project aimed at strengthening the capacity of
intermediary NGOs to deliver management training to poor women micro entrepreneurs. The
training program consisted of Grassroots Management Training (GMT) carried out for women
producers and the Training of Enterprise Support Teams (TEST) for the trainers of GMT. In
2002, as a result of a strategic planning process, Udyogini made changes in implementing
strategy, deciding to initiate programs to engage directly with women producers at the
grassroots.
Back in the early 1990s, when Udyogini was established, the focus on microenterprise
management training was innovative at a time when even microcredit was a new idea. Udyogini
took an early lead in the domain by motivating smaller NGOs towards microenterprise in their
portfolio of programs for poverty alleviation for women. It enabled NGOs, through a program of
sustained support comprising training for enterprise awareness, management and counseling, to
move into developing microenterprise programs and having staff with orientation to
microenterprise. The NGOs that have grown and now have established microenterprise programs
such as URMUL, SURE and LUPIN in Rajasthan; NIPDIT and Samanwita in Orissa and
ADITHI in Bihar are distinguished alumni of Udyogini enterprise motivation and management
training.
In its intervention at Mandla district, M.P. The project began in 13 villages to support around
200 women. They work in two clusters namely Babaliya and Bakori at Mandla district. By the
end of 2005, Udyogini worked with nearly 1200 women from 60 villages.
KSRM 13
1.2.2 Project Overview:
As part of the business development service, Udyogini has established a rural retail chain in the
form of Village Level Service Centers (VLSC) by imparting training and skill development of
women and by also giving financial support to open VLSC and enhance their livelihood.
Udyogini now desires to sell agriculture-inputs and farm equipments on lease through Village
Level Service centers (VLSC) and to develop a sustainable business model for the same. By this
the organization not only wants to strengthen the women entrepreneurs who are operating the
VLSC but also help the farmers at their agriculture activities with keeping the business intreste.
1.3 Rationale of the study:
Though the contribution of the primary sector, which includes agriculture, to the total Net State
Domestic Product is gradually coming down, agriculture is still the mainstay of the state
economy, as about 71percent of the population is still dependent on the agriculture The work
participation rate in state is 42.74, out of the total worker 42.79% are cultivator 28.69 are
agriculture labourer, 4.01 are engaged in house hold industry and the rest are in other services.
Agriculture in the state is still traditional and rain fed. There is high proportion of low value
crops with low productivity, agriculture holdings are fragmented. Thus it clearly state that
agriculture is the major livelihood activity in the region but still it contribute least in the GSDP
and NSDP of the Madhya Pradesh.
Sectoral contributon to GSDP

Agrticulture Services Industry
24%
35%
41%
KSRM 14
(Source: Review of Madhya Pradesh Economy, CMIE, Aug 04)
The Mandla district our area of study is also representing the same picture. The major constraints
in the low agriculture productivity in the region are as follows
 Fragmented and small land holdings.

 Rain fed agriculture.
 Traditional agricultural practices (lesser utilization of fertilizers, pesticides,
herbicides, traditional agricultural tools and techniques).
 Limited availability of agriculture input and services.
 Other challenge lays in the heterogeneity of demand and spread of the rural
villages which results in poor connectivity with agriculture market.
Thus there is need of understanding the demand of agricultural inputs and related services of the
people in the region and based upon this develop a business model/supply chain to fulfil their
needs at their own villages that too at fair prices. That can help them to increase the productivity
in near future.
1.4 Objective of the study:
The study is focused to the asses the feasibility of the distribution of agriculture inputs and
related services in the targeted villages with the long term goal of increasing the agricultural
productivity by providing the assistance to the farmers and thereby increasing the income of the
farmers. To achieve the goal following objectives are set
 To acquaint ourselves with present agriculture scenario Viz. agriculture inputs,

agricultural services used at target villages and average expenditure of the farmer on the
same
 To estimate the demand for agricultural inputs and other related services in the targeted
villages
 To assess the market condition of the agriculture inputs and services

KSRM 15
 To develop business model/supply chain for the agriculture inputs and services in the
target village
1.5 Scope of the Study:
The information, suggestions and opinions made can help in strategic planning for developing
the business plan for the distribution of the agriculture inputs and other related services to
increase the productivity in long term and thereby increasing the income of the farmer to
improve the quality of life of the farmers. The primary data collected regarding agriculture
demand, market analysis, competitor analysis and distributor interviews at sample village and
systemic knowledge generated by this will result in the creation of a resource for other future
study. The academic study that arises from the project will provide a model for similar work
elsewhere.
1.6 Location Of The Study:

The study was extended to 20 villages of Babaliya, Niwas and Maneri clusters of Jabalpur and
Mandla districts of Madhya Pradesh state.
1.7 Limitations of Study:
 The time period was not sufficient enough for studying the different dimensions and details
which could be more beneficial.
 As some of the villages are not the operational areas of the organization, lack of the basic
information about village cause difficulty in data collection.
 Poor and delayed transportation facility also delayed the data collection.
KSRM 16
2. Methodology:
Phases
Phase 1 Phase 2
(Background (Field
Study) Work)
Data
Discussion With Sample Questionnaire Collection
Udyogini Staff Design Development
Data
Analysis
Report
Writing
Fig 1, Phases of the Project.
Phase 1:
The phase 1 of the project consisted of the background study on agricultural inputs used in
Madhya Pradesh, the demographic features and agricultural pattern .It include detailed
discussion with the staff of Udyogini, based on the discussion and background study the
questionnaires were developed.
Phase 2:
The phase 2 of the project consisted of the field work for the collection of data from the
respondents. Various statistical tools were applied to analyze the data. The final report was
prepared on the analyzed data.
KSRM 17
2.1. Designated area
The area of this study is limited to 20 villages of Mandla and Jabalpur districts and the markets
of both these districts. The respondents for the questionnaire based survey were all in Babaliya,
Niwas and Maneri region of Mandla and Jabalpur districts whereas some information about the
current marketing practices was taken in from Jabalpur and Mandla.
2.2. Sample Design and Sampling Method:
In a stratified sample the sampling frame is divided into non-overlapping groups or strata of
farmer and non farmer. In this report the stratum is of farmers who have their own land. Then the
respondents are randomly selected based on their availability and willingness to participate in the
survey. The Farmers Households of the 20 villages of Maneri, Babliya and Niwas cluster were
the universe for the study with one farmer as unit of the study.
2.3. Survey Design:

In order to conduct a comprehensive and meaningful study the basic requirement is of accurate
and reliable data. In our study we have collected both primary and secondary data in order to
meet the true purpose of our study.
For primary data collection three questionnaires were designed in order to get information from
the stakeholders. First questionnaire was designed for the farmers who uses any kind of
agricultural inputs and services like fertilizers both organic and inorganic, tractors, thrashers etc.,
the second questionnaire was designed for the retailers to analyze the market and the third
questionnaire was designed for the distributors of Mandla and Jabalpur districts. The
questionnaire was framed with notable demographic and psychological variable. A psychological
instrument of their interest in agricultural inputs attributes and opinion statements were used to
KSRM 18
understand the respondent’s interest and opinion regarding further improvement in sector of
agricultural inputs.
2.4. Data Collection
Since the research involved analysis on both the product and the process, the data was collected
for both.
2.4.1. Product data collection – the data on product was collected from potential
customers. The data was collected through both questionnaire and discussion based
methodology. The data here was collected to know about the preference and usage of
farmers/consumer towards agri-input products and their perceived demand.
2.4.2. Process data collection – this data was mainly collected on what the ongoing process
is and how it can be improved. This data was firstly collected from retailers of the
local markets, how agri-inputs are availed from district level distributor and how do
they sell it to farmers, what is the potential demand and what is the seasonality.
Secondly the data is collected from district level distributors about how the supply
chain works.
2.5. Data Analysis
The data collected was processed or analyzed using various statistical tools after tabular and
graphical summarization of the raw data. After the data analysis the final conclusion were drawn
and these conclusion formed the basis for developing the marketing strategy.
KSRM 19
3. Literature Review
Fertilizer is key input in enhancing crop production. Fertilizer consumption and food grain
production is closely correlated. Presently fertilizer contributes about 50% to the total increase in
food grain production. Increasing pressure of population and shrinking land resources demand
for vertical expansion of agriculture where the role of fertilizers will further increase. At the
present level of nutrition, additional 150 million tons of food grain production has to be achieved
to feed almost 1.5 billion people by 2040. This estimate does not include demand for animal
feed, which will rise due to depleting grasslands. Thus, the crusade of higher production of food
grain has to continue with increased vigour using fertilizers along with the other sources of plant
nutrients.
Table: All India Fertilizer Consumption and Food Grain Production (Million Tons)
India has become third largest country with a total capacity of 11.757 million tons of N and
5.056 million tons of P2O5 in year 2000-2001. Domestic production of nitrogenous fertilizers
was 10.942 million tons in 2000-2001, whereas production of phosphatic fertilizers was 3.734
million tons, which are marginally high, compared to last year’s production. All India capacity
utilization has gradually improved
over the years and was maintained at almost cent per cent level. However, during 2000- 01
restrictions were imposed on capacity utilization for Urea at 92% as a consequence the
production of urea declined. The increase in production of total N is observed due to increase in
production of DAP and other complexes which also have 'N'. Production of DAP during 2000-01
was 10 % higher compared to previous year.
KSRM 20
3.1. Fertilizer Consumption

Fertilizer nutrients (N+P2O5+K2O) consumption in India, in the past 50 years, has increased
manifold and reached a record level of 18.128 million tons during 2000- 2001. However, the
consumption of all the three nutrients declined during 2000 _2001 and total consumption
dropped to 16.631 million tons). Urea and DAP are the most popular fertilizers, accounting for
53 and 18 per cent respectively, of the total fertilizer material consumed in the country. NPK
grades which can help in promoting balanced fertilization, constitute less than 7 per cent of the
total fertilizer materials. Fertilizer use in India is mainly limited to Urea, DAP, MOP and SSP.
Table: All India Consumption Of Plant Nutrients (In Million Tons)
3.2. Fertilizer Distribution Channel

Fertilizers are produced or imported at about 200 locations in the country and distributed among
the farmers scattered through the length and breadth of the country in about 6,27,000 villages
through a net work comprising of private and institutional channels. Some quantities are also
made available through the manufacturers own outlets. Private trade accounts for about 70% of
the total fertilizers distributed in the country, followed by institutional agencies at 30%, and
marginal quantities are distributed through manufacturers own outlets. Among the institutional
KSRM 21
agencies, cooperatives happen to be the main distribution agencies. The total number of fertilizer
sale points in India is more than 2,80,000 out of which about 72,580 (26%) are institutional
agencies sale points (mainly cooperatives and remaining 2,07,818 (74%) are controlled by the
private trade. On an average one-fertilizer sale point covers more than two villages. NE states,
Bihar, Orissa, H.P., M.P., Rajasthan have very thin spread of sale points and on an average one
sale point covers more than three villages. Distribution network in these states require
intensification.
Table: Number Of Fertilizer Sales Point and Their Spread

KSRM 22
3.3. Subsidy on Fertilizers

Subsidy on fertilizers was introduced with the intention that Indian farmers will get fertilizers at
affordable and uniform price. However, increasing use of fertilizers increased the subsidy burden
on the government exchequer to the unbearable extend. In August 1992 subsidy on phosphatic
and potassic fertilizers was withdrawn. As a consequence of this, price of phosphatic fertilizers
almost doubled and that of potassic fertilizers trebled, consumption of these fertilizers went
down and ratio of N:P:K consumption got distorted. Government of India introduced some
concession to restore the balance fertilizer application. In the long-term policy, the subsidy
withdrawal in a phased manner has been proposed. However, modalities to phase out the subsidy
have not been clearly mentioned. With the withdrawal of subsidy and concessions the prices of
fertilizers will increase. In the totally decontrolled scenario, the stability and uniformity of
fertilizer prices is not likely to be achieved. Indian farmers who were getting fertilizers almost at
the uniform price throughout the country may not continue to avail this opportunity. They may
also witness fluctuating market price of a fertilizer within a short span of one crop season. Such
price variation may affect farmers purchase decision as well.
Table: Subsidy On Fertilizer
With the withdrawal of subsidy and concessions the prices of fertilizers will increase. In the
totally decontrolled scenario, the stability and uniformity of fertilizer prices is not likely to be
achieved. Indian farmers who were getting fertilizers almost at the uniform price throughout the
country may not continue to avail this opportunity. They may also witness fluctuating market
price of a fertilizer within a short span of one crop season. Such price variation may affect
farmers purchase decision as well.
(G.C. Shrotriya, Paradigm Shift In Fertilizer Sector In India, IFFCO)

KSRM 23
4. Analysis and Findings
A feasibility study is essentially a process for determining the viability of a proposed initiative
and services and providing a framework and direction for its development and delivery.
A typical feasibility study will
 Verify the community needs for the proposed activity or services and asses the overall
value the same. (Demand analysis )
 Asses the market condition. (Market analysis)
 Determine the required resources e.g. Capital and operating. (Technical analysis)
 Determines the costs and financing strategies. (Financial analysis)
 Socio-economic analysis.
 Formulate the delivery options and recommend the most effective delivery strategy.
(Business model development)
4.1. Demand analysis of agriculture inputs and related services:
Demand analysis for agriculture inputs and related services was done in two phases. The first
phase was idea generation phase in which first of all the desk research was done to understand
the agriculture scenario at Madhya Pradesh, Mandla district and then at the target block of the
district. This phase also included extensive and productive discussion with the organisation staff
for target village identification and questionnaire development.
The second phase was field study to understand the demand of agriculture inputs and related
services at the study villages.
Major findings of demand analysis are as follows:

KSRM 24
Mandla District
Source: Census 2001
Agriculture
Overview
 Total geographical area: 965,559 hectares.
 Net sown area: 23% of total geographical area. Fallow land and land not available for
cultivation accounts for 13% of the total geographical area.
 Forest: 60%
 Cropping intensity: 149%
 Percent of net sown area irrigated: 7%

KSRM 25
 Main occupation for 87% of all workers in the district is agriculture.
Land holding
(a) 40% of the farmers have very small holdings, avg. 0.45 ha accounting for 7% of the
total cultivated area.
(b) 38% of the farmers have relatively large holdings, avg. 4.89 ha accounting for 79%
of the total cultivated area.
Source; Human Development Report Madhya Pradesh 2007

KSRM 26
4.2. Inferences from the Field Study
The field study includes the survey of 20 sample villages to assess the demand of Agriculture
inputs and Farm equipments on lease in the villages. 297 farmer HHs were surveyed with the
sample size of 25 percent.
4.2.1 Land Holding Pattern:
Most of the farmers at the surveyed villages are having the small land holding, the following
table and graph shows the land holding pattern at the surveyed village.
Table: Land Holding Pattern at Sample Villages
Land Holding Pattern

Land Holding Pattern 24% 30%
No. of
Marginal (0-2.5)
Land holding/acre HHs
Small (2.6-5)
Marginal (0-2.5) 181
Small (2.6-5) 273 Large (More then 5)
46%
Large (More then 5) 143
Source: House Hold Survey

KSRM 27
4.2.2 Land Irrigation Pattern
The graph shows that only 13% of the total land holding is irrigated, which follows the state
picture of rain fed agriculture with little or no irrigation facilities and use of irrigation inputs.
Land Irrigation Pattern

13%
Irrigated Land
Unirigated Land
87%
Source; House hold survey
4.2.3 Major crops production and area under crops
The two important food grain crops of the region are Paddy and Wheat, which contribute about
53 percentage of the total production and 68.34 percentage of the total food grain production.
Pulses collectively contribute about 8.42 percentage of total food grain production. Along with
Paddy, Wheat, and Pulses; Maize and Minor millets are also grown abundantly in the region.
Among non food grain crops oilseeds like Ramtila, Rai, Alsi and Tilli are cultivated in the region
and contribute approximately 5.20 percentage of the total production.
At present, about 31.69 percentage of the total cropped area is under Paddy and about 21.25
percentage of the area is under Wheat. The oilseeds are cultivated under 9.11 percentage of the
total cropped area.
KSRM 28
Major
0% 0%
Crops and Production
1% 4%
6% Paddy Wheat
32% Maize Rahar
8%
Urad Rai
4%
Ramtila Masoor
3%
Kodo Kutki
6%
Chana Batra
1% 5%
21% Tili Alsi
8%
Table: Village Vice Consumption Of Agri-input And Services
Average Consumption per Village Irrigation Inputs Seeds

Village Name
Urea (Quintal)DAP (Quintal)
Herbicides (HHs)
Pesticides Spray
(HHs) Pump (HHs)Tractor (HHs)Thresher (HHs)
Diesel Pump (HHs)
Electric Pump (HHs) Paddy (HHs) Amount used (Quintal)WheatAmount
(HHs) used (Quintal)
PulsesAmount
MaizeAmount
Mehra Sivani 14.4 11.82 0 0 0 7 11 0 0 5 3.05 4 2.35 0 0 2 0.08
Lohari 20.15 3 1 0 0 2 0 1 1 0 0 0 0 1 1 0 0
Amdari 19.48 9.21 1 1 2 3 8 4 0 2 0.35 1 0.1 0 0 0 0
Mawai Rayyat 1.06 0 1 0 1 1 0 1 0 1 1 1 0.5 0 0 0 0
Mawai Maal 4.55 2.25 0 2 0 2 1 2 0 4 2 0 0 0 0 0 0
Banar 10.65 5.95 0 2 0 6 23 9 1 5 1.3 1 0.05 7 0.75 0 0
Majhgaon 12.35 3.32 0 1 0 9 12 3 0 1 0.2 0 0 2 0.2 1 0.04
Chhapra 11.58 5.45 0 0 0 0 4 7 0 1 0.03 0 0 0 0 1 0.02
Chakdehi Rayyat 13.65 2.4 0 0 0 1 0 2 0 0 0 0 0 0 0 0 0
Malthar 4.5 0.7 2 0 0 3 1 4 0 1 0.5 1 1 1 0.02 1 0.2
Bandariya 3.65 1.1 0 0 0 1 3 2 0 0 0 0 0 0 0 0 0
Katang Sivani 6.23 3.55 0 2 0 2 2 1 0 1 1 2 0.3 0 0 0 0
Sukhram 2.13 1.47 0 0 0 0 0 0 0 1 0.1 0 0 2 0.1 0 0
Lehsar 12.75 6.65 6 5 8 2 18 0 15 0 0 6 2.85 2 0.5 0 0
salehpani 13.75 4.5 9 0 6 0 18 0 13 3 0.7 0 0 0 0 0 0
Mehgaon 29.75 15.05 5 4 4 11 30 0 1 0 0 6 4.3 3 1.15 0 0
Katangi 9.15 3.3 0 0 0 0 5 0 3 0 0 1 0.25 0 0 0 0
Jamgaon 10.55 7.3 0 0 0 5 19 18 0 0 0 1 0.5 0 0 0 0
Melhari 1.35 0.5 1 1 1 1 0 2 0 2 1.4 0 0 1 0.03 0 0
Tarvani 6.5 1 0 3 0 0 0 21 0 1 0.1 0 0 1 0.2 0 0
KSRM 29
4.3. Demand estimation of Agriculture inputs in the village
As the agriculture in the region is mainly rain fed, land fertility is low and most of the farmers
still rely on the traditional agricultural practices the demand of the agriculture input is not
satisfactory and less then the expectation of the organization. Although the demand of the
agriculture input is low still the study villages show the potential for the agriculture inputs and
related services.
The study show that among all the agriculture input Urea, DAP and Herbicides are mainly used
by the farmers in the villages. About 59 percent of the farmers use Urea at their fields and mainly
used for the Wheat cultivation. DAP is consumed by 28 percent of the farmers and about 5
percent of the farmer use Herbicides with the approximately volume of 62.81Liters. Total
demand of the Urea in the sample village is approximately 788.33 Quintals and that of DAP is
about 334.37 Quintals. The Framers buy Urea and DAP mostly from the cooperative at
subsidized rate or from the market. The purchase from the cooperative depends upon the land
holding. The major constrains for the use of the Urea and DAP by the farmers are
 Low fertility and poor soil quality of the Land.

 Insufficient irrigation facilities due geographical location, poor infrastructure and
unavailability of irrigation inputs
 Low purchasing power of the farmers
Other than Urea, DAP and Herbicides the demand of other agriculture inputs are nominal.
Pesticides and Vermicompost are used by only 4 percent of the farmer each inputs only that too
at some villages only. Vermicompost is used in the villages where MPRLP is at operation and
Vermicompost pits are built free of the cost. The use of other fertilizers like MOP, SSP, and Bio-
fertilizers is negligible in this region as only one farmer of the sample use MOP and one farmer
Bio fertilizers.
KSRM 30
Table: Average and Total Demand of Agri-Inputs in Sample Villages**
Agriculture No. of Avg.

S.No inputs and farmer Total Deman
. Services using Demand d
1 Urea 296 788.33 Q 0.68 Q
2 DAP 186 334.37 Q 0.58 Q
3 Vermicompost 21 81.68 Q 0.99 Q
4 Herbicides 28 62.81 Lts 0.57 Lts
5 Pesticides 19 98.28 Lts 1.32 Lts
6 Paddy Seeds 27 46.02 Q 0.43Q
7 Wheat Seeds 24 51.79 Q 0.55 Q
8 Pulses Seeds 20 13.53 Q 0.17 Q
**All the analysis has been done on following assumptions:
We had a sample size of 25% of farmer house hold at each village
We had an assumption that 80% of House Holds are farmers at the village
Agriculture Inputs Utilisation

5%
4% 4% Urea
0%
DAP
Other Fertilisers
Vermi-compost
29% Pesticides
58% Herbicides

KSRM 31
Consumption Pattern of Seeds

12%
1%
41% Paddy
Wheat
Maize
Pulses
46%
4.4. Demand estimation of Farm equipments on lease (Agriculture Services)
The major Farm equipments on lease or agriculture services used in the villages are Tractor,
Thresher, Irrigation inputs like Diesel pumps, Electric pumps, and Spry pumps. 43 percent of
surveyed farmers take Thresher on rent, 22 percent farmers rent Diesel pump, 10 percent Electric
pump, 15 percent of the farmers take Tractor on the rent and 10 percent take Spray pump. Only 8
percent of the farmers surveyed take Plough on rent. The use of these equipments depends upon
the resources availability and geographical location of the villages. Most of the time the farmers
hire these equipments at their own village from the co villagers and some time they have to rent
these services from the neighboring large villages or market centers like Babliya, Niwas,
Pipariya,Pipariya, Dhanpuri, Kundum. The rent mainly depends on the place of hiring. In all
surveyed villages we observed that the rent on thresher is paid on kind that is on an average 10
Kgs per quintal.
KSRM 32
Table: Farm equipment on lease Utilization
Agriculture Total Avg. Rent

Inputs HHs (Rs)
Electric Pump 34 30/Hr
Diesel Pumps 77 50/Hr
Kerosene Pumps 1 20/Hr
Tractor 55 328/hr
Weeder 0 0
Plough 7 50/Day
Hand Harrow 0 0
Spray Pump 28 20/Day
Thresher 155 160/Q
Soil Testing 16 0
Agriculture Services Utilization
10%
Electric Pump
22% Diesel Pumps
44%
Tractor
Plough
Spray Pump
Thresher
8% 15%
2%
Table: categorization of village’s Urea consumption*

KSRM 33
Total Consumption
Category Village name (Quintals) No. of HHs
Mawai Rayyat 1.06 3
Melhari 1.35 3
Sukram 2.13 8
Bandariya 3.65 5
Malthar 4.5 7
Mawai Maal 4.55 6
Katang Sivni 6.23 16
Low (1-7Q) Terbani 6.5 31
Katangi 9.15 9
Jamgaon 10.55 21
Banar 10.65 21
Chapra 11.58 20
Majhgaon 12.35 16
Lehsar 12.75 11
Chekdehi Rayyat 13.65 22
Salehpani 13.75 21
Medium (8-15Q) Mehrasivni 14.4 14
Amdari 19.48 11
High (15 and Lohari 20.15 17
Above) Mehgaon 29.75 28
Table: categorization of village’s based on DAP consumption
Category Village name Total Consumption No. HHs

(Quintals)
No consumption Mawai Rayyat 0 0
Very Low (<1) Melhari 0.5 1
Malthar 0.7 3
KSRM 34
Low (>=1 and Terbani 1 6

<3) Bandariya 1.1 3
Sukram 1.47 5
Mawai Maal 2.25 3
Chekdehi Rayyat 2.4 8
Medium (>=3 Lohari 3 4
and <8) Katangi 3.3 3
Majhgaon 3.32 9
Katang Sivini 3.55 9
Salehpani 4.5 3
Chapra 5.45 10
Banar 5.95 14
Lehsar 6.65 8
Jamgaon 7.3 9
High (>=8 and Amdari 9.21 13
above) Mehra Sivni 11.82 13
Mehgaon 15.05 24
Table: Categorization of the Village based on Herbicides consumption
Total
Total No. of Consumption
Category Village name HHs (Lit)
Katangi, Sukhram
,Bandaraiya,Mawai
No consumption
Mall,Katang 0 0
(0)
Sivini,Terbani, Jamgaon,
Banar, Chapra,
KSRM 35
Majhgaon,Chekdehi
Rayyat, Mehra Sivni
Mawai Rayyat 1 0.75
Amdari 1 0.1
Low (1-2 HHs) Melhari 1 2
Lohari 1 2.75
Malthar 2 2.5
High (5 and Mehgaon 5 1.5
Lehsar 6 2.5
Above)
Salehpani 9 3.4
Table: Categorization of the Village based on Pesticides consumption
Total
Total No. of Consumption
Category Village name HHs (Lit.)
Katangi, Sukhram
,Bandariya,Mawai
No consumption Rayyat, Jamgaon,
0 0
(0) Chapra,Chekdehi
Rayyat, Mehra
Sivni,Salehpani, Lohari,
KSRM 36
Malthar
Majhaon 1 2
Amdari 1 0.1
Melhari 1 1
Low (1-3) Mawai Maal 2 2
Katang Sivni 2 1.25
Banar 2 0.7
Terbani 3 1.5
High (4 and Mehgaon 4 13
Above) Lehsar 5 3.5
Table: Categorization of the Village based on consumption of Thresher

KSRM 37
Total
Consumption
Category Village name (HHs)
Mawai Rayyat, Malheri,
Sukhram, Tarbani,
No Consumption Chakdehi Raiyyat,
(0) Lohari 0
Mawai Maal 1
Malthar 1
Katang Sivni 2
Bandariya 3
Chapra 4
Low (1-5 HHs) Katangi 5
Medium (6-11 Amdari 8
HHs) Mehra Sivni 11
Majhgaon 12
Lehsar 18
Salehpani 18
Jamgaon 19
High (12 and Banar 23
Above HHs) Mehgaon 30
Table: categorization of villages based on utilization of Tractor
Total
Category Village name Consumptio
KSRM 38
n (HHs)
Tarbani,
No Sukhram,
Consumptio Katangi,
n (0) Salehpani, Chapra 0
Mawai Rayyat 1
Chakdehi Rayyat 1
Bandariya 1
Melhari 1
Low (1-3 Lohari 2
HHs) Mawi Mall 2
Katang Sivni 2
Lehsar 2
Amdari 3
Malthar 3
Medium (4- Jamgaon 5
6 HHs) Banar 6
Mehra Sivni 7
High (7 and
Majhgaon 9
Above HHs) Mehgaon 11
Table: categorization of village based on the Utilization of Diesel Pumps
Total
Consumptio
Category Village name n (HHs)
Mehra Sivni,
No Lohari, Malthar,
Consumptio Sukhram, Lehsar,
n (0) Salehpani, 0
KSRM 39
Mehgaon
Mawai Raiyyat 1
Katang Sivni 1
Low (1-3 Mawai Maal 2
Chakdehi Rayyat 2
HHs) Bandariya 2
Melheri 2
Majhgaon 3
Amdari 4
Medium (4-
Malthar 4
7 HHs) Chapra 7
Banar 9
High (8 and
Jamgaon 18
Above HHs) Tarbani 21
Table: Categorization of Villages based on Utilization of Electric Pumps
Total
Consumption
Category Village name (HHs)
Mehra Sivni, Amdari, Mawai Rayyat, Mawai
Maal, Majhgaon, Chapra, Chakdehi Rayyat,
Malthar, Bandariya, Katang Sivni, Sukhram,
No Consumption (0) Jamgaon, Malheri, Tarbani 0
Lohari 1
Banar 1
Low (1-5 HHs)
Mehgaon 1
Katangi 3
Salehpani 13
High (10 and Above HHs) Lehsar 15
KSRM 40
Table: Categorization of Villages based on Utilization of Spray Pumps
Total
Consumption
Category Village name (Quintals)
Majhgaon, Mawai Maal, Tarbani, Katan Sivni,
No Consumption (0) Katangi, Jamgaon, Mehra Sivni, Chapra, Banar, 0
Sukhram, Chakdehi Rayat, Lohari, Bandariya
Mawai Rayyat 1
Low (1-3 HHs) Melhari 1
Aamdari 2
Mehgaon 4
Medium (4-7 HHs) Salehpani 6
Hi gh (8 and Above HHs) Lehsar 8
4.4.1. Ranking of the Villages according to Consumption Urea and DAP
The village were ranked according to the Average consumption of the Urea and DAP at the
villages by the farmers.
Table: Ranking of villages according to Consumption of Urea and DAP
Village Rank Village Rank

Mehgaon 1 Chakdehi Rayyat 10
Mehra Sivani 2 Katang Sivani 11
Amdari 3 Katangi 11
Lehsar 4 Mawai Maal 12
Salehpani 5 Tarvani 13
Lohari 6 Bandariya 14
Jamgaon 7 Sukhram 14
Banar 8 Malthar 15
Chhapra 8 Melhari 16
Majhgaon 9 Mawai Rayyat 17
4.4.2. Ranking of the villages for Farm equipment on lease Utilization:

KSRM 41
The villages are ranked according to the Number of the Farmer HHs using/ hiring the farm
equipments at the villages. Farm equipments are Tractor, Thresher, Diesel Pumps, Electric
Pumps, and Spray Pumps.
Table: Ranking of villages according to utilization of Agri.-input services by HHs
Village Rank Village Rank

Bandariya 1 Mawai Maal 10
Lohari 2 Lehsar 11
Chhapra 3 Amdari 12
Katangi 4 Mawai Rayyat 12
Jamgaon 5 Salehpani 13
Banar 6 Tarbani 13
Chakdehi Rayyat 7 Katang Sivani 14
Melhari 8 Mehra Sivani 14
Mehgaon 9 Sukhram 15
Malthar 10 Majhgaon 16
4.5. Market Analysis
4.5.1. Target Market
The Key market segment for agriculture inputs and related services are the farmer of the 20 study
villages which include farmers from the Babaliya, Niwas, and five villages of Maneri cluster of
the Mandla and Jabalpur district. The Maneri cluster is not the operation area of the organization.
Most of the villages are remotely located and approximately 5-6 Km away from the nearest
market/weekly Haats. Although the organization wants to start the business with villages where
it is having its Village Level Service Centre (soon) but it also wants to expand to other remote
villages of the clusters.
Major Market Centers for the study villages are Niwas, Babliya, Pipariya, Maneri, Dhanpuri,
Kundum.
4.5.2. Market Size

KSRM 42
In the absences of any related Secondary data or information and reliable primary information
we assumed that total demand came out after the research is the market size for our study. The
Market size/ demand for agriculture inputs and farm equipments on lease are as follows.
Table: Average and Total Demand of Agri-Inputs
S.No Agriculture Total Avg.

. inputs Demand Demand
1 Urea 788.33 Q 0.68 Q
2 DAP 334.37 Q 0.58 Q
3 Herbicides 62.81 Lts 0.57 Lts
4 Pesticides 98.28 Lts 1.32 Lts
Table: Farm equipment on lease Utilization
Agriculture Total Avg. Rent

S.No. Equipments/Services HHs (Rs)
1 Electric Pump 34 30/Hr
2 Diesel Pumps 77 50/Hr
3 Kerosene Pumps 1 20/Hr
4 Tractor 55 328/hr
5 Plough 7 50/Day
6 Spray Pump 28 20/Day
7 Thresher 155 160/Q
4.5.3. Products and Services
As per the Demand analysis Urea and DAP can be the main agriculture inputs, the other inputs
can be herbicides and pesticides. The Urea and DAP are having very small product line and the
major brand sold in the regions are Kisan Urea, Chambal Urea, IFFCO Urea, Navrata Urea, IPL
DAP, PPL DAP, Navratna DAP.As compared to Urea and DAP Herbicides and Pesticides are
having more product line and brands.
Demand analysis shows that farm equipments on lease not only have less demand due natural,
physical, economical constraints like low soil depth, lack of irrigation facilities, lack of proper
KSRM 43
electricity supply and low purchasing power but also the people can get these equipments at
that their own villages .
The study shows that both agriculture inputs and farm equipments on lease have inadequate
supply at the villages.
4.5.4. Competitor analysis
The analysis was done at the villages which are market centers for Agriculture Inputs and Farm
Equipments for the study villages. The villages for competitor analysis are Babaliya, Niwas,
Maneri, Dhanpuri, Barela. Along with the competitor analysis Distributor interviews were taken
at Mandla, Jabalpur and Barela to get further information required. The competitors of the
business are categories in two groups.
1. Government operated Cooperatives/ Fair shops

2. Private Retailers
Table: Competitor analysis.
Recove
No. of ry Rate
Products/Se Avg. Price
Category Competitor villages on
rvices Volume Range
Covered Credit
sales
Adim Jati Seva Urea 20 ton 282/ 50 kg 25%
Sahkari Samiti DAP 29 20 ton 528/ 50 kg
(Maneri) SSP 8-9 tons 170/ 50 kg
Urea 60 ton 282/ 50 kg 35%
Adim Jati Seva DAP 15 ton 528/ 50 kg
Sahkari Samiti SSP 34 2 ton 169/ 50 kg
Government (Niwas) Loan NA NA
Grain seeds 25 Q NA
Urea 12 Q 280/ 50 kg 70%
Kisan Krishi DAP 25 Q 530/ 50 kg
Kendra Pesticides 50 40-45 Ltrs 650/ 500 ml
(Babliya) Grain seeds 140 Q NA
Pulses seeds 11 Q NA
KSRM 44
Urea 100 Q 290/ 50 kg NA

DAP 50 Q 540/ 50 kg
NPK 50 kg 110/ kg
Zinc 50 kg 150/ 5 kg

Krishi Udyam Herbicides 30 Ltrs 300/ 250 ml
Pesticides 5 30 Ltrs 80/ 250 ml
(Dhanpuri)
Spray

Pumps NA 1050/ unit
Vegetable

seeds 10 kg NA
Grain Seeds 15 Q NA
Urea 450 tons 5400/ ton 90%
DAP 25-30 ton 10400/ ton
SSP 3 ton 3100/ ton
Potash 3 ton 230/ 50 kg
Krishi Jagat Vegetable
Private 30
(Dhanpuri) Seeds 2.13 Q NA
Retailers
Grain Seeds 12 Q NA
Pulses Seeds 1.5 Q NA
Herbicides 350 Ltrs 6450/ 5 ltrs
Pesticides 50 Ltrs 230/ ltr
Pesticides 200 Ltrs 1300/ ltr 60%
Herbicides 250 Ltrs 350/ 250 ml
Patel Krishi Vegetable
84
Kendra (Barela) Seeds 150 kg NA
Pump Sets NA NA
Spray pumps NA NA
Urea 50Q 282/ 50 kg 50%
Sharad Kirana DAP 10Q 500/ 50 kg
6
Store (Niwas) Vegetable Don't

Seeds Know NA
Shivani Kirana Urea 180 Q 282/ 50 kg NA
20
Store (Babaliya) DAP 5Q 527/50 kg
4.5.5. Strength and Weakness of Competitors:
Government Cooperatives and Fair Shops

KSRM 45
A) Strength
1. Competitive advantage at Capital and investment capacity.
2. Good Soft Structure , policies, and plan.
3. Good repertoire with customers.
4. Fixed share in fertilizer production.
5. Strong distribution channels.
6. Deep penetration (Villages).
7. Also provide technical Support.
B) Weakness
1. Not proper implementation of policies and plan.
2. Black Marketing.
3. Demand is more than supply.
Private Retailers
A) Strength
1. They can sell the products in loose and at credit.
2. Good repertoire with customers.
3. Save transportation cost as they don’t have to sell the product at villages.
4. Agri.-Inputs and equipments Centers are located at the market centres.
5. Updated pricing strategies and mechanism.
6. Diversified portfolio as most of the retailer take it as a side business and the retailer
who are dealing just in this business have diversified portfolio along with good
penetration.
B) Weakness
1. Most of the retailers are not having any Licenses except the one who are just engaged
at the business of Agriculture inputs and equipments.
2. Most of the project villages are far located.
3. Most of the Retailers are not having warehouses.
KSRM 46
4.6. Technical Analysis
The technical analysis is done assuming that the business is for the time period of five years. The
analysis is done for two approaches which are as following:
 Agricultural inputs products and related services
 Agricultural inputs products only
4.6.1 Technical analysis for the business of agricultural inputs products and related
services:
The essential requirements for the business of agricultural input products and related services are
enlisted below:
Technical Inputs/ Requirements

Warehouse (capacity @ 500 sq feet)
Licenses for Fertilizers, Pesticides & Herbicides
Tractors with Trolley & Plough (1)
Diesel Pump set of 5 H.P (5)
Electric Pump set (2 H.P) (2)
Spray Pumps 15 Liters (20)
Thresher (2)
Weeder (40)
Hand Harrow (20)
One Manager
One Agri Input Expert (for Research, Development and Training)
One Supervisor cum Accountant
One Drivers (for 6 months only)
One Watchmen
One Peon
KSRM 47
4.6.2. Technical analysis for the business of agricultural inputs products only:
Technical Inputs/ Requirements

Warehouse (capacity @ 500 sq feet)
Licenses for Fertilizers, Pesticides & Herbicides
One Manager
One Agri Input Expert (for Research, Development and Training)
One Supervisor cum Accountant (One for Warehouse)
One Watchmen
One Peon
4.6.3. Marketing Strategy:
Urea, DAP Field Demonstration

Herbicides Training
Pesticides FGDs with farmers
Farm Equipment on Lease
Promotion
Product
Place
Price
Villages of Babaliya, Niwas Price derived by pricing
and Maneri Clusters strategy
KSRM 48
Pricing Process:
Data Information Price Decision

Internal
Internal Summary
Summary Statistics
Statistics Decision
Decision
Customer
Customer Reports
Reports Methodology
Methodology
Competitive
Competitive
Market
Monitoring and Evaluation Market Response Communication

Sales Customer Prices offered to Customers
Margin and Profits Competition Communication to Customers
Retention Distribution
Competitive Reports
Importance of Optimal Pricing:

KSRM 49
The curve above describes the best way to decide about the pricing of the agri-inputs and
services provided by the organization. The curve above describes how the low pricing as well as
high pricing are harmful towards profit. If the product is priced too low, the organization tends to
acquire losses as it would not be able to compensate for its costs. If the product is priced too high
then also the organization would incur losses as its competitors would gain from it for they’d
provide the services to people at a lower rate than the organization. As such it is critical for the
organization to decide upon the price of the product optimally so as to benefit both the
organization as well as its customers.
4.7 Inferences from Distributor Interviews:
The nearest big markets of agri-inputs and services are Mandla and Jabalpur of which Jabalpur is
the bigger of them. It is a hub of big distributors of agri-inputs and services in the whole Mandla
and Jabalpur. Dhanpuri is also a market for agri-inputs but not of that magnitude. The details of
the potential distributors for the business are described as followed:
4.7.1. Distributor Analysis for Fertilizers:
Distributor Analysis Fertilizers

Distributor Location Can Selling Selling Transportation Cost Buyb
's Name Provide price Price of ack
the Req. of DAP Facili
KSRM 50
Quantity Urea ty
Purohit Mandla YES Rs. Rs. 515/ Will be borne by YES
Traders 270/50 50 kg Distributor in off season or
kg Bag when Company give the
Bag Free on Road (FOR)
Aggarwal Jabalpur YES Rs. Rs. 518/ Have to borne by UJAS or NO
Brothers 278/50 50 kg Udyogini
kg Bag
Bag
Madhu Jabalpur YES Rs. Rs. 515/ Will be borne by NO
Fertilizers 270/50 50 kg Distributor in off season or
Pvt. Ltd. kg Bag when Company give the
Bag Free On Road (FOR)
4.7.2 Distributor Analysis for Pesticides and Herbicides:
Distributor Analysis Pesticides & Herbicides

Distributor' Location Can Provide Discount Offered Discount offered Buyback
s Name the Req. on Pesticides on Herbicides Facility
Quantity
Krishi Dhanpur YES Up to 7% on MRP Up to 10% on NO
Jagat i MRP
Aggarwal Jabalpur YES Up to 7% on MRP Up to 10% on NO
Brothers MRP
4.8. Financial Analysis

The financial analysis is done assuming that the business is for the time period of five years. The
analysis is done for two approaches which are as following:
1. Financial analysis for the business of agricultural inputs products and related services.
2. Financial analysis for the business agricultural inputs products only.

KSRM 51
1. Financial analysis for the agricultural inputs products and related services:
4.8.1. Fixed Cost Analysis:
FIXED COST for Agri-Input Products & Serviecs

PARTICULARS AMOUNT (INR)
Ware House Cost
Warehouse cost @ Rs 3000/- per month (Capacity 400 Q) 3000/-
Warehouse cost for 12 months 36000
Warehouse cost for 5 years 180000
Licensing Cost
Licensing Cost for three years (For Fertilizers) 1250/-*2 = 2500/-
Licensing Cost for three years (For Pesticides & Herbicides) 2000/-*2 = 4000/-
Total Cost of Licensing for five years 6500
Investment in Vehicles
Investment in Tractors (One) 450000/-*1= 450000/-
Tractor Trolley (One) 40000/-*1 = 40000/-
Tractor Plough (One) 15000/-*1 = 15000/-
Total 505000
Investment in Farm Equipment Leasing
Diesel Pump set of 5 H.P (5) 20000/-*5 = 100000/-
Electric Pump set 2 H.P (2) 9500/-*2 = 19000/-
Spray Pumps 15 Liters (40) 1500/-*40 = 60000/-
Thresher (2) 40000/-*2 = 80000/-
Weeder(40) 500/-*40 = 20000/-
Hand Harrow(20) 700/-*20 = 14000/-
Total 293000
Management cost for Warehouse and Farm Equipment Leasing for 5 years
Manager 8000/-
One Agri Input Expert (for Research, Development and 6000/-
Training)
One Supervisor cum Accountant 4000/-
One Drivers (1500*1) for six months only 1500/-
One Watchman 1500/-
One Peon 1500/-
TOTAL COST (for 1 month) 22500/-
Total cost for 12 months 22500/-*12 = 270000/-
Total MANAGEMENT COST for five years 1350000
Essential Maintenance Cost
Maintenance Cost of Tractor (Annually) 5000/- each 8000/-
Maintenance Cost of Warehouse (Annually) 3600/-
Maintenance Cost of Farm Equipments (Annually) 8000/-
Total Maintenance Cost for one year 19600/-
KSRM 52
Total Maintenance Cost for five years 98000

Total Fixed Cost for five years 2432500
4.8.2 Fixed Cost Analysis for Five Years
Fixed Cost Analysis for five years (for Agriculture Input Products & Services)
Year Ware Licensing Vehicles Farm Manage Essential TOTAL
house Equipments -ment Maintenance
Cost Cost
0 0 3250 505000 293000 0 0 801250
1 36000 0 0 0 270000 19600 325600
2 36000 0 0 0 270000 19600 325600
3 36000 3250 0 0 270000 19600 328850
4 36000 0 0 0 270000 19600 325600
5 36000 0 0 0 270000 19600 325600
TOTAL FIXED COST FOR 5 YRS 2E+06
4.8.3. 1.Variable Cost Analysis:
Variable Cost (For 1st Year)

Particulars Amount (INR)
Transportation Cost
1. Diesel Price*Km (Diesel = Rs 42/ ltr) (Avg
5km/ltr)
Babaliya to Maneri = 60 kms (per trip) 5040
Babaliya to Bakori = 20 kms (per trip) 1680
2. Labour Cost (Rs1.5*570bags*1) 855
3. Tractor (Diesel Cost @ Rs 42/ ltr for 633 hrs) 26586
4. Thresher (Diesel Cost @ Rs 42/ltr/Q for 3040 Q) 127680
TOTAL TRANSPORTATION COST 161841
Insurance for Tractor 6645
Insurance for Warehouse Supplies 452
Electricity Bill (500 per month*12) 6000
Procurement Cost
Urea @ 270/50 Kg bag*400 108000
D.A.P @ 515/50Kg bag*170 87550
Pesticides
Type 1 @ 201/liter*12Liters 2412
Type 2 @ 211/liter*13liters 2532
Herbicides
KSRM 53

Total Procurement Cost for 1st Year 221922
Total Variable cost for 1st Year 396860
4.8.3.2 Variable Cost* Analysis for Five Years:
Variable Cost Analysis for Five years

Year Trans- Insuranc Insurance Elect Cost of Cost of Cost Cost Total
porta- e Premium ricity Urea D.A.P of of
tion Premium for Bill Pesti. Herbi.
cost for Warehou
Tractor se
0 0 0 0 0 0 0 0 0 0
1 161841 6645 452 6000 108000 87550 4944 21428 396860
2 168315 4652 484 6120 115560 93679 5290 22928 417026
3 175047 3954 517 6242 123649 100236 5660 24533 439839
4 182049 3361 554 6367 132305 107253 6057 26250 464195
5 189331 2857 592 6495 141566 114760 6481 28088 490169
TOTAL 2208090
*Assumptions:
1. It is assumed that the transportation cost may increase by 4% per annum
2. It is assumed that there will be minimum four trips for the transportation of agri-input products
from CLSCs to VLSCs per annum
3. It is assumed that the procurement of agri-input products will increase by 7% as our sales will
rise by the same percent per annum
4. It has been assumed the warehouse insurance premium will rise by 7% as the procurement will
also increase by the same percent per annum
5. It has been assumed that the tractor insurance premium will decrease by 30% in first year and
thereafter it will decrease by 15% per annum
6. It has been assumed that the electricity bill will increase by 2% per annum.
4.8.4.1. Sales* Analysis of CLSC
CLSC to VLSC
Particulars Rate Quantity Amount (INR)
Urea Urea @ Rs 280/ 50kg Bag 200 Quintals 112000
KSRM 54
DAP DAP @ Rs 526/ 50kg bag 85 Quintals 89420

Pesticides
Bayer 1ltr @ Rs 218 12 ltrs 2616
DuPont 1 ltr @ Rs 228 13 ltrs 2964
Herbicides
PI 1ltr @ Rs 1078 11 ltrs 11858
Bayer 1 ltr @ Rs 1048 11 ltrs 11528
Tractor Rs 330 per hour 633 hrs 204712.2
Diesel Pump Set Rs.40 per hour 7025 275380
Electric Pump Rs.40 per hour 3200 125440
Set
Thresher Rs.100/quintal 3040 Quintals 297920
Weeder Rs.9/day 90 days 32400
Hand Harrow Rs.18/day 120 days 43200
Spray Pump Rs 11/ day 702 days 308880
TOTAL SALES (1st Year) 1518318
*Assumptions:
 It is assumed that we will meet 25% of the demand
 It is assumed that our pump sets will run for 5 hours for 5 days by one person.
 Weeder is used by 40 persons for 90 days @ Rs 9/ day
 Hand harrow is used by 20 persons for 120 days @ Rs 18/ day.
4.8.4.2. Sales Flow* Analysis Year Wise:
Sales
Year Sales (in INR)
0 0
1 1518318
2 1624600
3 1738323
4 1860005
5 1990205
*Assumption: 1. It has been assumed that our sales will increase by 7% per annum
1.4. Financial Viability Analysis for CLSC
FINANCIAL VIABILITY ANALYSIS OF AGRI INPUTS AND SERVICES TOTAL

YEAR 0 1 2 3 4 5
KSRM 55
Total Fixed Cost 801250 325600 325600 328850 325600 325600 2432500
Total Variable Cost 0 396860 417026 439839 464195 490169 2208090
Total Cost (A) 0 722460 742626 768689 789795 815769 4640590
Total Sales (B) 0 151831 1624600 173832 186000 1990205 8731452
8 3 5
EBIT = (B-A) - 795858 881974 969633 107021 1174436 4090862
801250 0
Tax @ 2% pa 0 15917 17639 19393 21404 23489 97842
EAT = (EBIT- - 779941 864335 950240 104880 1150947 3993020
Tax) 801250 6
4.9. Net Present Value (N.P.V) and Internal Rate of Return (IRR):
NPV Discount Rate

Rs. 2,750,459.36 8%
Rs. 2,023,653.83 15%
Rs. 495,432.56 50%
Rs. 12,550.87 100%
Rs. 0.10 103.1879% IRR
-Rs. 6,656.21 105%
-Rs. 10,190.04 106%
-Rs. 20,230.51 109%
-Rs. 23,399.50 110%
The Net Present Value (NPV) is always positive for all the discount rates (i.e. 1% to 103.187%).
The internal rate of return is 103.187%
Note: The discount/interest rate used in determining the present value of future cash flows.
KSRM 56
4.11. Profitability Ratio:
Profitability Ratio:
Net profit Margin Ratio 0.46
Operating Profit Margin 0.47
Ratio
Gross Profit Ratio 0.85
4.12. Return on Investment (ROI):
The Return on Investment (ROI) is -.12%.
2. Financial analysis for the agricultural inputs products:
2.1 Fixed Cost Analysis:
FIXED COST for Agri-Input Products

PARTICULARS AMOUNT (INR)
Ware House Cost
Warehouse cost @ Rs 3000/- per month (Capacity 400 Q) 3000/-
Warehouse cost for 12 months 36000
Warehouse cost for 5 years 180000
Licensing Cost
Licensing Cost for three years (for Fertilizers) 1250/-*2 = 2500/-
Licensing Cost for three years (for Pesticides & Herbicides) 2000/-*2 = 4000/-
Total Cost of Licensing for five years 6500
KSRM 57
Management cost for Warehouse and Farm Equipment Leasing for 5 years
One Manager 8000/-
One Agri Input Expert (for Research, Development and 6000/-
Training)
One Supervisor cum Accountant(One for warehouse) 4000/-
One watchmen 2000/-
One peon 1500/-
TOTAL COST (for 1 month) 21500/-
Total cost for 12 months 21500/-*12= 258000/-
Total MANAGEMENT COST for five years 1290000/-
Total Maintenance cost for one year (Ware House) 3600
Total Maintenance cost for five years (Ware House) 18000
Total Fixed Cost for five years 1494500/-
2.1.2 Total Fixed Cost Analysis for Five Years:
Fixed Cost Analysis for Five Years

Yea Warehouse Licensing Management Cost Maintenance Cost TOTAL
r Rent
0 0 3250 0 3250
1 36000 0 258000 3600 297600
2 36000 0 258000 3600 297600
3 36000 3250 258000 3600 300850
4 36000 0 258000 3600 297600
5 36000 0 258000 3600 297600
TOTAL FIXED COST FOR FIVE YRS 1494500
2.2 Total Variable Cost for First Year:
Variable Cost (For 1st Year)

Particulars Amount (INR)
Transportation Cost
1. Diesel Price*Km (Diesel = Rs 42/ ltr) (Avg
5km/ltr)
Babaliya to Maneri = 60 kms (per trip) 5040
Babaliya to Bakori = 20 kms (per trip) 1680
2. Labour Cost (Rs1.5*570bags*1) 855
TOTAL TRANSPORTATION COST 7575
Procurement Cost
Urea @ 270/50 Kg bag*400 108000
D.A.P @ 515/50Kg bag*170 87550
KSRM 58
Pesticides
Herbicides
Total Cost of Procurement 221922
Electricity Bill (350 per month*12) 4200
Total Variable cost for 1st Year 233697
2.2. Variable Cost* Analysis Year Wise:
Variable Cost Flow Analysis for Five Years

Yea Transportation Electricity Cost of Cost of Cost of Cost of TOTAL
r cost Bill Urea D.A.P Pesti. Herbi.
0 0 0 0 0 0 0 0
1 7575 4200 108000 87550 4944 21428 233697
2 7878 4284 115560 93679 5290 22928 249619
3 8193 4370 123649 100236 5660 24533 266641
4 8521 4457 132305 107253 6057 26250 284842
5 8862 4546 141566 114760 6481 28088 304302
TOTAL Variable Cost for Five Years 1339101
*Assumptions: 1.It is assumed that the transportation cost may increase by 4% per annum
2. It is assumed that there will be minimum four trips for the transportation of agri-input products
from CLSCs to VLSCs per annum
3. It is assumed that the procurement of agri-input products will increase by 7% as our sales will
rise by the same percent per annum
4. It has been assumed the warehouse insurance premium will rise by 7% as the procurement will
also increase by the same percent per annum
5. It has been assumed that the electricity bill will increase by 2% per annum.
KSRM 59
2.3. Sales* Analysis:
Sales Analysis of CLSC (1st Year)

Particular Rate Quantity Amount (INR)
s
Urea Urea @ Rs 280/ 50kg Bag 200 Quintals 112000
DAP DAP @ Rs 526/ 50kg 85 Quintals 89420
Bag
Pesticides
Bayer 1ltr @ Rs 218 12 ltrs 2616
DuPont 1 ltr @ Rs 228 13 ltrs 2964
Herbicides
PI 1ltr @ Rs 1078 11 ltrs 11858
Bayer 1 ltr @ Rs 1048 11ltrs 11528
TOTAL SALES (1st Year) 230386
*Assumption: It has been assumed that we will meet the 25% of demand in first year.
2.3.1. Sales Flow* Analysis Year Wise:
Sales Flow Analysis of CLSC for Five Years

Year Sales
0 0
1 230386
2 246513
3 263769
4 282233
5 301989
*Assumption: It has been assumed that sales will increase by 7% per annum.
2.4. Financial Variability Analysis:
FINANCIAL VIABILITY ANALYSIS OF AGRI INPUTS TOTAL

YEAR 0 1 2 3 4 5
Total Fixed Cost 3250 297600 297600 300850 297600 297600 1494500
Total Variable Cost 0 233697 249619 266641 284842 304302 1339101
Total Cost (A) 0 531297 547219 567491 582442 601902 2830351
Total Sales (B) 0 230386 246513 263769 282233 301989 1324890
EBIT = (B-A) -3250 - - -303722 - - -1508711
300911 300706 300209 299913
Tax @ 2% pa 0 0 0 0 0 0 0
EAT = (EBIT- -3250 - - -303722 - - -1508711
Tax) 300911 300706 300209 299913
KSRM 60
2.5 Net Present Value (N.P.V) Analysis:
NPV Discount Rate

-Rs. 8%
1,116,260.25
-Rs. 880,648.85 15%
-Rs. 350,860.92 50%
-Rs. 147,491.27 100%
-Rs. 51,051.62 200%
-Rs. 25,870.77 300%
The Net Present Value (NPV) is always negative for all the discount rates (i.e. 8% to 300%)
Socio-Economic Analysis
The foremost aim of any NGO is to help the community to increase their socio-economic status
keeping in regards the business aspect of the intervention. The products and services provided by
the business would not only be beneficial to the farmers but also help in generation of additional
employment. This business reinforces the vision, mission and goal of Udyogini i.e. to empower
women as an entrepreneur as the products would be sold through VLSCs to the farmers in their
respective villages. The other benefits associated with the business are elaborated below:
Opportunity cost : Total cost method (TCM) has used to calculate the opportunity cost.
Estimation based on primary research:-
Average time spends in a year for availing Agri- 32 hrs

inputs
Numbers of men who collects Agri-inputs 386
Working hours in a day 8 hrs.
Wage earn by man in a day Rs. 70

KSRM 61
Calculation of opportunity cost:-
Total no. of hours in Ave. time spends *No. of men 32 12352 hrs.
a Year hrs.*386
Total no. of days In a Total no. of hrs. / working hrs. in 12352 1544
Year a day hrs. / 8 hrs.
Value of Agri Inputs Total on. Of days * wage rate 1544*70 Rs. 108080
Advantages:
Following advantages can be there:
TIME CAN BE SAVE
The time consume by men can be saved if there would be the facility of agri inputs at their door
step in a reasonable cost which they can afford.
SAVED TIME CAN BE UTILISE
The opportunity cost which lies in this plus the social cost to the village is huge. This time can be
utilized by the people to do other jobs like working in NAREGA and other Govt. projects which
will surely enhance their livelihood needs.
PRODUCTIVE CYCLE OF TIME SAVED

KSRM 62
The saved time can be use for productive work that can be an additional source of income for the
family. The Major portion of the income is consume by the family either rest of the income can
be save and then invest in infrastructure like ,hand pump, well, house, vehicle, home appliances
etc to get a good quality of life which will further give them an additional time to do some
productive work.
Or some part of the income can be spend for paying to the services which can give them
good quality of life. This services can be safe drinking water, electricity, bio- gas connection,
sanitation etc. These good qualities of life help them to save their time which they can further
utilize in any productive work.
The productive cycle of chain keeps on running until the saved time through good quality
of life is not utilizing by the person for productive work, increase expenditure on consumption or
give the preference to saving instead of spending on services or investment on infrastructure
KSRM 63
Conclusion:
After research and analysis it is concluded that the business of distribution of agricultural inputs
and farm equipments on lease is not feasible due to various reasons such as:
 The geographical conditions (poor soil quality, low soil depth, lack of proper irrigation
facilities, etc) of the villages are not suitable for extensive agriculture. Therefore the
demand of the products and services cannot be adequately increased.
 The purchasing power of the farmers is not sufficient to invest in the scientific
agricultural practices. It is evident from the fact that most of them are dependent only on
agriculture and mono-cropping is prevalent in the region. Their secondary occupation
comprises of agriculture labour and wage labour.
 The demand analysis shows that the demand for agricultural inputs and services is not
sufficient enough to start a new business. Market analysis shows that although the
competition is less in the region but due to the State government’s interventions it is at
disadvantage.
 The financial analysis shows that although there is profit in the business but the amount is
not sufficient enough to recover the cost incurred to start the business. The breakeven
point of the business is not reached even in the 5 th year of the business. The Net Present
Value (NPV) at the discount rate of 15% shows a negative outcome which indicates that
it is wise not to invest in the business.
KSRM 64
 Although it is not financially viable it can be socio-economically advantageous for both

the organization and the community.
Recommendation:
As the business is not financially viable and sustainable, the organization should not invest in
this business. The organization should instead be engaged in promotion of some livelihood
development activities and skill/ capacity building of the people so that their purchasing power
can be increased. This would help the organization in two ways:
 Building repertoire with the community which will help the organization in their future
interventions.
 Once the purchasing power of the community increases any intervention of the
organization would be positively responded.
If they still want to invest in the distribution business, it is recommended that they do it after they
are convinced that the community would respond positively to it.

MTS Report Compiled 1.1

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MTS Report Compiled 1.1

Uploaded by

Copyright:

Available Formats

KSRM 1

Feasibility Of Distributing Agri-Inputs Through VLSC

Feasibility Study of Distribution of Agricultural Inputs through the Village

Udyogini, Jabalpur, M.P.

“A REPORT SUBMITTED IN THE PARTIAL FULFILLMENT OF

School of Rural Management

SCHOOL OF RURAL MANAGEMENT, KIIT UNIVERSITY

The MTS Report of

Reza Mohammad Khan

Sumeet Kumar Pandey

Candidate for the degree of MBA Rural Management

towards making this report possible.

Chapters, sections, sub sections with page numbers

List of Tables/ Figures/ Abbreviations

List of new terms with explanation

1.1.1 Global Agri-Input Scenario:

World fertilizer consumption increased from 1995/96 to 1999/2000, declined in 2000/01 by

1.1.2 Agri Input Scenario In India:

1.2.1 Organization Overview:

1.2.2 Project Overview:

1.3 Rationale of the study:

Sectoral contributon to GSDP

(Source: Review of Madhya Pradesh Economy, CMIE, Aug 04)

 Fragmented and small land holdings.

1.4 Objective of the study:

 To acquaint ourselves with present agriculture scenario Viz. agriculture inputs,

 To assess the market condition of the agriculture inputs and services

1.5 Scope of the Study:

1.6 Location Of The Study:

1.7 Limitations of Study:

Fig 1, Phases of the Project.

2.1. Designated area

2.2. Sample Design and Sampling Method:

2.3. Survey Design:

2.4. Data Collection

3.1. Fertilizer Consumption

Table: All India Consumption Of Plant Nutrients (In Million Tons)

3.2. Fertilizer Distribution Channel

Table: Number Of Fertilizer Sales Point and Their Spread

3.3. Subsidy on Fertilizers

(G.C. Shrotriya, Paradigm Shift In Fertilizer Sector In India, IFFCO)

4. Analysis and Findings

A typical feasibility study will

4.1. Demand analysis of agriculture inputs and related services:

Major findings of demand analysis are as follows:

Source: Census 2001

 Cropping intensity: 149%

 Percent of net sown area irrigated: 7%

 Main occupation for 87% of all workers in the district is agriculture.

Source; Human Development Report Madhya Pradesh 2007

Source; Human Development Report Madhya Pradesh 2007

Source; Human Development Report Madhya Pradesh 2007

4.2. Inferences from the Field Study

4.2.1 Land Holding Pattern:

Table: Land Holding Pattern at Sample Villages

Land Holding Pattern

Source: House Hold Survey

4.2.2 Land Irrigation Pattern

Land Irrigation Pattern

Source; House hold survey

4.2.3 Major crops production and area under crops

Source; House hold survey

Table: Village Vice Consumption Of Agri-input And Services

Average Consumption per Village Irrigation Inputs Seeds